From Seekingalpha · Lee Bailey · · 40s
McDonald's Earnings Bounce Priced Too High
McDonald's stock price jumps ahead of earnings but turnaround remains unproven.
In brief
McDonald's stock price jumps ahead of earnings but turnaround remains unproven. McDonald's stock is overvalued at $280 despite earnings growth, as U.S. sales fell 0.2% and free cash flow hasn't improved. Originally reported by Seekingalpha.
Investor Rating
McDonald's is rated Sell at $280, with fair value near $210.
U.S. Sales Decline
U.S. comparable sales dropped 0.2% as higher check sizes failed to offset falling visits.
Franchise Model Concerns
New international units generate lower direct revenue, and expansion hasn't boosted free cash flow.
NEXT Plan Limitations
The NEXT plan targets 50,000 locations but most benefits go to franchisees, not shareholders.
Here's the gist
McDonald's stock is overvalued at $280 despite earnings growth, as U.S. sales fell 0.2% and free cash flow hasn't improved.
